The National Bureau of Statistics (NBS) on Tuesday released the 2016 4th Quarter Gross Domestic Product (GDP) Report which shows a significant improvement in the country’s economic fundamentals and promising signs that things are beginning to turn for the better.
Although the numbers are still negative, indicators in the critical sectors show some encouraging improvements compared to those of the previous six months and also signposting a gradual recovery from recession.
According to the report, Gross Domestic Product (GDP) contracted by -1.30% in the quarter which translates to an estimated growth rate of -1.51% for the full year 2016.
Though the released figures reflect the slow-down in the economy for most part of that year, it also shows that the economy is gradually scaling up as indicated by improving trends in several key sectors.
In virtually all the sectors, the trend indicates an improvement in nominal and real terms and there are indications that coupled with the slowing down of the rate of growth in month-on-month inflation, the trend will enable a return to positive growth in the economy very soon.
Agriculture which is the focus of the current administration has continued to improve; capital importation is making some progress and confidence is being gradually restored in the markets.
Agriculture, crude oil levels, manufacturing and the country’s trade balance among others showed steady progress in the last quarter of 2016 when compared with the third quarter figures. Manufacturing is still negative but growth in the fourth quarter was the best in 2016; while government’s intervention and engagements in the Niger Delta have boosted crude oil production and export levels.
For the first time since 2015, the country’s trade balance is positive and although inflation is still going up, the month-on-month trend is slowing down and also improving. Same with manufacturing which, although still posting a negative figure, is an improvement on the third quarter outing.
According to the NBS Report, the oil sector declined by -12.38% in real term (year-on-year) in the fourth quarter of 2016. This was an improvement relative to the previous quarter, when the sector declined by -22.01%, but nevertheless was a more severe decline than in the fourth quarter of 2015, when a contraction of -8.23% was recorded.
“For the full year 2016, oil production is estimated at 1.833mb/day, compared to 2.13mb/day in 2015. This reduction has largely been attributed to vandalism in the Niger Delta region. As a result, the sector contracted by -13.65%; a more significant decline than that in 2015 of -5.45%. This reduced the oil sector’s share of real GDP to 8.42% in 2016, compared to 9.61% in 2015.”
Real agricultural GDP growth in the fourth quarter of 2016 was 4.03% (year-on-year), representing an increase of 0.56% from 3.48% recorded in the same quarter in 2015. However, this was slightly less than the real growth rate of 4.54% recorded in the previous quarter. “In contrast to the economy as a whole, for full year 2016, real GDP in agriculture grew by 4.11%, and this growth rate was higher than that recorded in 2015 of 3.72%.”
The contribution of Agriculture to overall GDP in real terms was 25.49% in the quarter under review, higher than its share of 24.18% in the corresponding quarter of 2015, but less than 28.65% share recorded in the previous quarter due to itshighly seasonal nature. For 2016 as whole, Agriculture increased its share relative to 2015, to 24.43%, due to its relatively strong growth rate.
The manufacturing sector actually grew on a quarter-on-quarter basis by 1.89% but declined over the year by 4.32% reflecting the problems that the sector faced during the year, due to a combination of factors. The metal ores sub-sector grew by 7.03% in the 4th Quarter of 2016 as against 6.93% in the last quarter of 2015, thus justifying the priority that the Federal Government continues to give to solid minerals.
It is expected that if the current trend of improving indicators is sustained, the economy will come out of recession very soon.
Media Adviser to the Hon. Minister of Budget and National Planning.